Summary
Apcotex Industries Limited - Q3 FY2026 Earnings Call Summary Friday, January 30, 2026 4:00 PM
Event Participants
Executives Abhiraj Choksey (Vice Chairman and Managing Director), Vivek Thakur (Chief Financial Officer)
Analysts Aditya Khetan (SMIFS Institutional Equity), Chandpal Singh (Individual Investor), Karan Sharma (Credent), KK Pandya (BHEL), Rudraksh Raheja (itought Financial Consulting), Sani Vishe (Axis Securities), Saurabh Shroff (QRC Investment Advisors)
Financials & KPIs
| Metric | Reported | Commentary |
|---|---|---|
| Sales Volume | +10% YoY | Growth driven by robust demand in domestic and international markets; 9M FY26 volume up +15% YoY. |
| Operating Revenue | ₹332 crores | -7% YoY; Decline due to lower raw material costs leading to reduced finished goods pricing despite volume growth. |
| Operating EBITDA | ₹44 crores | +61% YoY; Significant growth driven by higher utilization, improved margins, and operational efficiencies. |
| EBITDA Margin | 13.12% | +550 bps YoY; Expansion attributed to better product mix and volume-led operating leverage. |
| Profit After Tax (PAT) | ₹22 crores | +91% YoY; PAT margin stood at 6.7% after accounting for an exceptional item of ₹4.8 crores. |
| Exceptional Item | ₹4.8 crores | One-time provision related to the new wage code notification impact. |
| Debt Reduction | ₹94 crores | Reduction achieved over 9M FY26; Company remains net cash positive as of Dec 31, 2025. |
| Interim Dividend | ₹2.50 per share | Approved by the Board, underscoring commitment to shareholder returns. |
Geographic & Segment Commentary
- Nitrile Latex: Turnaround observed in the last six months with utilization reaching 70-75%. While not at pre-COVID levels, margins have improved following the US imposition of 100% duties on Chinese gloves, benefiting Southeast Asian customers.
- Nitrile Butadiene Rubber (NBR): Currently operating at 100% capacity utilization. The company remains the sole Indian manufacturer and is awaiting Finance Ministry notification on recommended anti-dumping duties to counter imports.
- Paper, Construction & Others: Paper segment margins recovered to “reasonable” levels due to higher utilization. Construction continues to grow, while Carpet, Textiles, and Tire segments saw slight volume degrowth due to US tariff uncertainties.
Company-Specific & Strategic Commentary
- Capacity Expansion (Valia): Investing ₹130-140 crores via an innovative lower-capex model to expand NBR volumes by 80-90%. This project is expected to be commissioned by March-April 2027 (FY27).
- Anti-Dumping Duty (ADD): DGTR recommended ADD on NBR imports from several countries; however, the Finance Ministry has not yet notified the implementation. Management is proceeding with expansion regardless of the delay.
- Renewable Energy: Completing a ₹3.5 crore captive wind energy investment in Gujarat by the end of FY26. Credits from this project are expected to start flowing in early FY27.
- Product Strategy: Focus is on “EBITDA per tonne” and ROCE rather than just percentage margins. Management is prioritizing high-margin customers as capacity utilization nears 85-90% across most lines.
Guidance & Outlook
| Metric | Guidance / Outlook | Commentary |
|---|---|---|
| Revenue Growth | Incremental ₹550-600 crores | Expected top-line addition once all current expansion projects are commissioned in FY27. |
| EBITDA Margins | 12% to 16% Range | Sustainable range target; actual percentage may fluctuate based on raw material price movements (Styrene/Acrylonitrile). |
| Tax Rate | ~27% to 28% | Effective tax rate expected for the full financial year. |
| Commissioning | Q4 FY2027 | Timeline for the completion and commissioning of the current ₹210 crore sanctioned project pipeline. |
Risks & Constraints
| Risk | Context |
|---|---|
| Raw Material Volatility | Sharp increases in Styrene and Acrylonitrile prices (linked to oil and rupee depreciation) can compress percentage margins in the short term. |
| Global Overcapacity | Significant overcapacity in China for Nitrile Latex remains a threat, potentially leading to dumping in Southeast Asian markets where Apcotex exports. |
| Regulatory Uncertainty | The lack of notification for Anti-Dumping Duties on NBR by the Finance Ministry remains a hurdle for protecting local market share against cheap imports. |
| Sectoral Slowdown | Export-oriented segments like Carpet and Textiles are facing headwinds due to US tariff regimes affecting Indian and Middle Eastern manufacturers. |
Q&A Highlights
Margin Sustainability & Raw Materials
- Question: How did the company improve margins despite commodity chemical struggles? (Aditya Khetan)
- Answer: While there were initial inventory hits, the team managed pricing well. Improved capacity utilization and a better customer/product mix were primary drivers (Abhiraj Choksey).
Expansion & Anti-Dumping Duty
- Question: What happens to NBR expansion if ADD is not notified? (Aditya Khetan)
- Answer: Expansion continues as the lower capex of ₹130-140cr (vs original ₹250cr estimate) makes it viable even without duties. Notification is delayed for 80-90% of industry cases currently (Abhiraj Choksey).
Utilization Levels
- Question: What is the current utilization across product lines? (Saurabh Shroff)
- Answer: NBR is at 100%, Nitrile Latex at 70-75%, and other synthetic latexes (Paper/Carpet/Construction) are at 85-87%. Tire cord is also at 85-90% (Abhiraj Choksey).
Financial Position
- Question: Why did interest costs drop so significantly? (Sani Vishe)
- Answer: 75% of the drop is due to debt repayment from strong cash flows; the rest is due to better negotiated interest rates. The company is now net debt-free (Vivek Thakur).
Forward Strategy
- Question: Is there a plan to forward integrate into glove manufacturing? (Aditya Khetan)
- Answer: Management evaluated this but decided against it currently due to massive global overcapacity in the glove supply chain (Abhiraj Choksey).
Key Takeaway
Apcotex Industries reported a strong Q3 FY26 with a 10% YoY volume growth and a significant 61% jump in EBITDA to ₹44 crores, despite a 7% revenue decline caused by lower raw material pass-throughs. The company successfully expanded EBITDA margins to 13.12%, supported by high capacity utilization (100% in NBR, ~85% in other latexes) and a recovery in the Nitrile Latex segment. Strategically, the firm is pivoting to a lower-cost ₹130-140 crore expansion model to nearly double NBR capacity by FY27, while remaining net debt-free through disciplined cash management. While the delay in Anti-Dumping Duty notification and global overcapacity in latex remain watch points, management remains confident in achieving a ₹550-600 crore revenue addition post-expansion. The company enters the next year focused on optimizing customer mix and navigating volatile raw material cycles to maintain healthy ROCE.
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